COT: Gold speculators turn bullish ahead of FOMC; Oil long drops further
Head of Commodity Strategy
Summary: Hedge funds increased bullish commodity bets for a second week with precious metals and grains being the main contributors while crude oil and industrial metals were sold.
Saxo Bank publishes two weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.
To download your copy of the Commitment of Traders: Commodities report for the week ending December 11, click here.
In crude oil, the relentless selling extending into an 11th week, albeit at a reduced pace. The combined net-long in Brent (+3.1k lots) and WTI (-8.6k lots) dropped to 256k lots, a three-year low. This occurred despite the Opec+ agreement to cut production over the coming months by 1.2 million barrels/day. The combined net-long – as per the chart below – is now more than 20% below the previous two lows in August 2016 and June 2017 from where crude oil rallied strongly on both occasions.
Silver, meanwhile, had its net-short reduced to just 9k lots, as speculators turned the least bearish since July.
In soft commodities funds added fresh Arabica coffee shorts as the bean suffered a sixth straight weekly decline, its longest losing streak since July. Signs of ample supply from Brazil and a weaker BRL supporting an elevated contango, which short-sellers attempts to benefit from.
Latest Market Insights
Q4 Outlook 2022: Winter is coming
- Winter is coming to the financial markets as central banks are tightening their grip. How spring will look is still a question.
European energy crisis: it will get worse before it gets betterThe winter in Europe will be tough, but whether the result is political chaos or sustainable, innovative solutions is still undecided.
A difficult and volatile quarter awaitsAs the year draws to an end, commodities continue to be at centre stage of the world with growth pockets political uncertainty.
The bright side: crises drive innovationThe positive spin on crises is that they come with solutions. It is worrisome that deglobalisation may be a response to this crisis.
Green transformation in China: renewable energy and beyondGoing green, China needs to span numerous energy sources to ensure stability, as every source comes with a challenge.
Asia: Intermittent solutions, but a faster renewable adoption curveAsian energy supply is being squeezed. This and the adoption of renewables may change the investment sentiment in the region.
FX: A Fed thaw needed to deliver a sustained USD turn lowerThe US Dollar can keep momentum when the Federal Reserve continues to tighten, leaving the rest to play to their drum.
Autumn can become ugly for equities and bond holders. Comfort for Dollar longsTechnical analysis suggests that equities could face a tough Q4 as could fixed income. US Dollar positions could provide some upside.
The next stock market sector to watch, with stocks going nuclearAs the world scrambles to find affordable, sustainable energy, nuclear is getting attention from politicians and investors alike.
The crypto space is getting cold when the hype disappearsCryptocurrencies face a winter of their own as retail investors and governments are asking tough questions.